As the Trump administration pivots from healthcare to tax reform, a new, innovative survey reveals the Trump administration’s tax reform agenda is at odds with the public’s priorities.

Based on “Tax Reform That Will Make America Great Again,” a document issued by the Trump campaign in September 2016, the administration will seek to reduce income taxes, corporate taxes, taxes on capital gains and dividends, the estate tax, and taxes on pass-through entities. None of these reductions are favored by a majority of the public or even a majority of Republicans. The only Trump proposal to get majority support is for increasing taxes for carried interest.

In the survey, conducted by the University of Maryland’s Program for Public Consultation, a representative sample of voters were given the opportunity to set revenue levels. Majorities increase income taxes for higher earners, corporations, and capital gains and dividends, while opposing reductions in the estate tax, or taxes on owners of pass-through-entities (e.g. partnerships). Overall the majority increase revenues by $112.2 billion per year. While Democrats increase revenues a bit more (118.5 billion), Republicans raise them somewhat less at $36.2 billion.

According to scoring of the Trump proposals by the Tax Policy Center and the Tax Foundation, the net effect of the reductions proposed by the Trump campaign in these six areas is a reduction of at least $441.9 billion in revenue. Thus the gap between the Trump proposals and the public’s positions is at least $555.1 billion.

“The American public appears to be far more concerned about the deficit than the President,” said PPC Director Steven Kull.

The one area where the public was in line with the Trump proposals was for increasing the tax on hedge fund managers, by taxing carried interest like ordinary income.

The survey took a representative sample of 1,800 registered voters through a process in which they were given the opportunity to make changes to existing taxes and to consider new tax proposals. As they went along they received input about the impact of their choices on the deficit, though they were not prompted to reduce the deficit. This is part of a larger study in which they were also given the opportunity to make changes to spending.

Personal Income Taxes
The Trump proposals call for reducing the top tax marginal tax bracket from 39.3 to 33 percent, repealing the Alternative Minimum Tax, and repealing numerous deductions. All income brackets would get some reduction, but just over three quarters of this reduction would go to the top twenty percent of taxpayers who would see their average tax rate reduced by 4.9 percent. The Tax Foundation, using dynamic scoring, projects that the resulting loss of Federal revenue will average at least $105.8 billion per year.  

For the public, the majority do not reduce the taxes of any income group. But they do make tax increases for higher earners income. Starting with a slight majority raising taxes on incomes starting at $100,000 (the top 22 percent of earners) by 5 percent, with larger percentages proposing 5 percent increases at higher income levels. At the million- dollar income level, 52 percent are ready to raise taxes by 10 percent. Majorities raised revenues a total of $63.3 billion.

Republicans start raising rates 5 percent on income starting at $200,000, producing a total of $34.1 billion in revenue. Democrats raise rates 5 percent starting at $100,000, going up to 10 percent starting at $500,000, producing a total of $69.6 billion in revenue.

Capital Gains and Dividends
Trump has proposed taxing capital gains and dividends at a rate that is half the rate of ordinary salary and wages, with a maximum rate of 16.5 percent. For most taxpayers this would constitute a tax cut and result in a reduction of revenues of $51 billion. But only 15 percent of respondents endorse this idea, (Republicans 21 percent, Democrats 10 percent).  On the contrary, 63 percent favor raising the tax rate from 23.8 to 28 percent for high-income earners (individuals with incomes of $430,000, couples at $500,000), increasing revenues by $22 billion (but just 49 percent of Republicans endorsed this position).

Corporate Taxes
Trump has called for a reduction of the top marginal corporate tax rate from 35 percent to 15 percent, repeal of the corporate Alternative Minimum Tax, and repeal of certain deductions, resulting in average annual reductions of $195.8 billion in revenue according to the Tax Foundation.  

Respondents were given the opportunity to increase or decrease the effective corporate tax rate (19.2 percent). A majority of 53 percent raise the effective tax rate to 20.2 percent, generating revenue of $17 billion. While 64 percent of Democrats take this step, only 41 percent of Republicans do so. However only 31 percent of Republicans lower the effective corporate tax rate.

Estate Tax
The Trump proposals call for eliminating the estate tax, which would reduce revenues by an average of $20 billion over the next 10 years. Just 22 percent of respondents, including 36 percent of Republicans favor this option. Rather, a slight majority of 51 percent favor raising the estate tax from the current 40 percent at least to 45 percent, increasing revenues by $7.8 billion (Democrats 65 percent, Republicans 37 percent).

 

 

 

Owners of Pass-Through-Entities
The Trump proposals specify making it possible for owners of pass- through-entities like sole proprietorships, partnerships, and S Corporations (which do not pay taxes on income) to not have their profits taxed like ordinary income as it is now, but rather to pay a maximum rate of 15 percent. This would result in a revenue reduction of $74.5 billion for 2018. This idea is rejected by large majorities, overall (66 percent) and among both parties (Republicans 62 percent, Democrats 70 percent).

 

 

Carried Interest
The one area where the public and the administration are in line is on requiring that managers of private investment funds, such as hedge fund managers, have their income taxed like ordinary income rather than as capital gains, which would increase revenues by $2.1 billion. This idea produces overwhelming consensus with 78 percent approving of it, including 75 percent of Republicans and 81 percent of Democrats.

The survey was fielded March 8-16 with a national probability-based sample of 1,817 registered voters, provided by Nielsen Scarborough from its sample of respondents, recruited by mail and telephone using a random sample of households. The margin of error was +/-2.3 percent.

The full report, which includes responses to spending items and other revenue options, will be forthcoming in the next weeks.

A full chart of these spending recommendations with party breakdowns can be seen at: http://vop.org/wp-content/uploads/2017/03/Comparing_Revenues.pdf

The questionnaire can be seen at: http://vop.org/wp-content/uploads/2017/03/Budget_Quaire_Revenues.pdf

 


New In-depth Survey Finds 10 Major Spending Gaps

An innovative survey from the University of Maryland’s Program for Public Consultation (PPC) reveals significant differences between the budget proposed in the Trump administration’s “Budget Blueprint” for 2018 and what the public recommends. The findings were released today by Voice Of the People.

For the top ten areas, the gaps between the spending proposals of the majority of the public and those of the Trump administration total $139.6 billion. For Republicans these gaps are narrower totaling $86.9 billion, while for Democrats the total is $188.5 billion.

“The gaps between the public’s proposed budget and the Trump administration’s budget are quite substantial,” said PPC Director Steven Kull, who directed the survey, “especially when it comes to military spending.”

Working on-line, a representative sample of more than 1800 registered voters were presented the authorized Federal budget for 2017, broken into 31 line items, and given the opportunity to make changes for 2018 as they saw fit, getting feedback as they went along about the impact of their choices on the budget deficit.

The ten major gaps between the majority position of the public and the Trump Budget Blueprint include:

Military Spending – $94.4 billion: By far the biggest gap is for the three components of military spending. Overall the Trump administration favors a $53.4 billion increase while the public favors a $41 billion cut – a $94.4 billion gap. For the base Pentagon budget, the Trump blueprint proposes a ten percent increase of $52 billion, while the majority of voters propose a five percent cut of $26 billion. For operations in in Afghanistan and against the Islamic State in Iraq, the administration wants to keep the current levels of $65 billion, however the public wants to see this cut back by $15 billion. For nuclear weapons, Trump calls for a seven percent buildup of $1.4 billion, while the public does not support an increase.

The gap between Trump’s military spending levels and those preferred by a majority of Republicans is smaller at $58.4 billion. A majority of Republicans favor no increase in the base budget, no increase in nuclear weapons spending and a $5 billion cut for operations in Afghanistan and Iraq. Democrats favor a $76 billion cut for the base budget, $15 billion for Afghanistan and Iraq and no increase for nuclear weapons—a $144.4 billion gap with Trump’s budget.

Education – $9 billion: For the Department of Education, overall the Trump administration makes a 13 percent reduction of $9 billion. The public overall does not make any changes to education. Republicans make a $9 billion cut ($5 billion for K-12, $4 billion for higher education), while Democrats make an increase of $3 billion ($2 billion for special education and $1 billion for higher education).

Veterans Affairs – $7.9 billion: For Veterans Affairs, Trump proposes a 4.5 percent increase of $7.9 billion (covering both mandatory and discretionary spending). But the public overall and neither Republicans nor Democrats want to see any increase.

Public Housing – $6.2 billion: For public housing, the Trump administration calls for a 13 percent cut of $6.2 billion. The public overall and the Democrats do not make a change, though a majority of Republicans call for a six percent cut of $3 billion.

State Department and AID – $6.1 billion: For spending on the State Department and the Agency for International Development the administration seeks a 28 percent cut of $10.1 billion from the core spending of $36 billion. The public agrees that there should be a cut, but only an 11 percent cut of $4 billion. A majority of Democrats do not make any cuts, but Republicans do cut $10 billion – in line with the president’s plan.

Medical Research – $5.8 billion: For spending on medical research the Trump administration favors a 17 percent cut of $5.8 billion for the National Institute of Health. The public overall and Democrats do not support any change, while Republicans are largely in line with the Trump administration, favoring a $5 billion cut.

Homeland Security – $4.8 billion: For Homeland Security the Trump administration wants a 7 percent increase of $2.8 billion, in part to make a down payment on the border wall with Mexico. The public overall and Democrats cut $2 billion. Republicans do not favor any change up or down, though “border protection” is mentioned as one of the activities in this category.

Space Program – $3.9 billion: The Trump administration only trims $100 million from the space program. However the public wants a $2 billion cut, though Republicans cut $4 billion and Democrats do not support a change.

Pollution Control – $2.6 billion: For spending on the Environmental Protection Agency, the Trump administration favors a 31 percent cut of $2.6 billion, while the public overall does not favor any change for pollution control. A majority of Republicans favors an 11 percent cut of $1 billion, while Democrats favor an 11 percent increase of $1 billion.

Mass Transit – $2 billion: The Trump administration calls for a $2 billion cut to Amtrak while the public overall does not favor any change in spending on mass transit. Republicans favor a $1 billion cut to mass transit, while Democrats favor a $1 billion increase.

The survey was fielded March 8-16 with a national probability-based sample of 1,817 registered voters, provided by Nielsen Scarborough from its sample of respondents, recruited by mail and telephone using a random sample of households. The margin of error was +/-2.3 percent.

The full report, which includes additional spending items and proposals for revenues, will be forthcoming in the next weeks.

A full chart of these spending recommendations with party breakdowns can be seen at: http://www.publicconsultation.org/wp-content/uploads/2017/03/Comparing-Budgets.pdf




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